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A recent workshop inquiry into the Public Investment Corporation (PIC) heard that the asset manager of R2.1 trillion in state funds should have an independent board chairperson.
The tradition has been for the deputy minister of finance to be appointed as the PIC chairperson.
Muitheri Wahome, who described herself as an independent financial professional, produced a report at the request of the commission of inquiry into the PIC on discussions and presentations given at the PIC workshop inquiry, which was held from May 17 to 19 at the Irene Country Lodge in Centurion.
The report said participants at the workshop proposed that “an independent PIC board chairperson with a significant background and demonstrable track record in investments or business, rather than an ex officio chairperson, should be appointed”.
“The appointment of board members should in future reside with the board nominations committee of the PIC. Board terms should be staggered, defined in term and duration, and key board committees and compositions clearly codified,” the report said.
“It is recommended that the chair, in consultation with the new CEO and minister of finance, work together to create the new board.”
Participants suggested that there be separate CEO and chief investment officer roles.
The PIC is the largest domestic asset manager and ranks among the top 20 pension funds in the world by assets under management. It has 23 institutional public sector clients.
The report summarised the major points that emerged from presentations, and “is not intended to be a detailed review or official record of all potentially relevant mandate, governance, strategic, operating model and investments issues from the PIC inquiry workshop”.
Participants at the workshop were told that the PIC board should encompass the right expertise required to play an effective oversight role, including actuarial, asset management, general business, legal, audit and risk expertise so that it could give advice on investment-related issues. It should have broad competence in asset management and business.
“As the PIC is a global investor and asset management is a global industry, the board should include individuals who bring global investment industry experience. The board should have an appropriate representation of key stakeholders, such as clients and trade union representatives, who also meet the minimum board competency requirements.
“From an administrative perspective, the chief investment officer reports to the CEO. However, the chief investment officer retains direct responsibility for the investment functions.”
